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This problem of legally differentiating between employees and contractors has been around for a while and relates to multiple factors so it is informative to lo

This problem of legally differentiating between employees and contractors has been around for a while and relates to multiple factors so it is informative to look at this in contextual terms. This arrangement has become known as the "ABC Test". There is a good summary of what it means at The Balance Small Business: https://www.thebalancesmb.com/what-is-the-abc-test-for-independent-contractors-4586615 https://www.thebalancesmb.com/what-is-the-abc-test-for-indep... and discussion of adoption of this test by the California Supreme Court at the California Public Agency Blog: https://www.calpublicagencylaboremploymentblog.com/wage-and-hour-2/california-supreme-court-adopts-new-abc-test-for-classification-of-independent-contractors-potential-risk-and-impact-on-public-agencies/ https://www.calpublicagencylaboremploymentblog.com/wage-and-.... To attempt to summarize in a way that answers your questions: First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? If you are following a script as trained and have someone overseeing you as you work then you are an employee. If you know what to do and get only summary instructions then you are likely a contractor. Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. Finally, if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee. Note that each of these criteria has substantial wiggle room and the idea is they all work together to support a decision one way or the other.

rem7 7y ago
From your second example... that sounds like it’s going to affect construction workers too... a lot of contractors just hire construction workers day to day to expand their workforce. Would that become illegal or is it different in construction?
- nradov 7y ago
  A lot of what contractors do in hiring day labor and paying them cash under the table is already illegal. I don't think this bill would change that.
- bryanlarsen 7y ago
  If yes, is this not a good a thing? Part-time employees are not significantly different than contractors in terms of benefits owed so it's not a major cost for that use case. And if you're working full-time for somebody, don't you deserve the benefits everybody else gets?
  - breerly 7y ago
    Yes and no. This will force companies to hire more employees, true, but at the cost of a much smaller overall workforce. Remember that cost is a constraint for businesses. Depends what is more valuable from a human + capitalism perspective, fewer work opportunities that pay better or more competition and “starter/flexible” work overall.
    - bryanlarsen 7y ago
      > but at the cost of a much smaller overall workforce. That's what people predict about minimum wage increases too. Yet the effect has always been smaller than predicted, sometimes even non-existent.
  - ansible 7y ago
    > And if you're working full-time for somebody, don't you deserve the benefits everybody else gets? I'd argue that if you deserve benefits like everyone else. Especially ridiculous is the situation some people I know of are in. They are working two or three part-time jobs because they can't find a full-time position. The places that employ them have many part-time positions, and fewer full-time positions. And these people don't get benefits. So you've got people who are working 40+ hours a week, for employers who have enough hours to work to have full-time employees, but instead have part-time job openings instead. All so that the employers don't have to pay for benefits.
    - JeffL 7y ago
      I would guess it's because their labor is not worth minimum wage plus all the extra overhead costs of a full time employee. It's people trying to get by despite stupid price controls that don't reflect reality.
- ThrustVectoring 7y ago
  A general contractor's area of business isn't exactly doing construction, it's the project management aspects. Talking to vendors, organizing work crews, acquiring specialized labor from various trades, communicating project information to various stakeholders, etc. It's a subtle distinction, but one that I suspect would survive legal scrutiny.
bko 7y ago
If that's true, then I would argue that Uber and Lyft are contractors not workers: > First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? ... If you know what to do and get only summary instructions then you are likely a contractor Surely Uber drivers already know how to drive. I'm not sure whether they're under obligation to follow GPS instructions. > Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. The Uber driver uses her own equipment although you could argue that they use Uber's methods. > if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee In my experience, almost every single Uber I've been in drives for Lyft as well.
- rtpg 7y ago
  I think the sticking point for Uber is > the person performs work that is outside the usual course of the hiring entity’s business It’s hard to say that offering rides is not Uber’s core business. There might be an argument that Uber is just a matching service, but that’s an argument to make, not self-evident. This sort of stuff is happening a lot in construction and cleaning services as well. If you run a business, the people that do the core part of your business should be considered employees, or else all of labor law becomes pointless.
- yardie 7y ago
  > I'm not sure whether they're under obligation to follow GPS instructions. UberX, no, the GPS is a suggested route. UberPool, yes, you have to follow the GPS as instructed. > The Uber driver uses her own equipment although you could argue that they use Uber's methods. This is where I tend to agree, with caveats. A rideshare driver is a contractor. But when it comes to compensation Uber and Lyft want to act as an employer. Currently, compensation has been trending down to the point it's becoming a unprofitable for the driver. A contractor would be able to negotiate a rate saying, "I'll drive for $0.55/mile." What we currently have is an email to all "contractors" stating the rate starting today is X/mile. That sounds more like an employer notice than a contract negotiation.
graeme 7y ago
So you can't subcontract? That's often within the same industry
i_am_proteus 7y ago
This seems like it will affect government and corporate "on-site" contractors more than software-routred cabs. Unintended Consequences, arriving.
- dragonwriter 7y ago
  Individual government on-site “contractors” are almost entirely W-2 employees of firms that are contracted by government. That's often, though perhaps not as consistently true, of BigCorp onsite contractors, as well. There will be no impact to those at all.
  - i_am_proteus 7y ago
    So if one wanted to drive flexibly for a software-routed cab company under the proposed California regume, could one set up an LLC and then contract through the LLC?
    - gamblor956 7y ago
      Yes, probably. That is actually how most (sub)contractors in the construction world currently have things set up for legal reasons.
    - malandrew 7y ago
      If anyone is looking for a startup idea, there's probably some merit in setting up an LLC-as-a-service business so those individuals impacted by AB5 that do want the flexible work can continue to do so without much headache.
jiveturkey 7y ago
> To attempt to summarize Correct me if I'm wrong, but you're summarizing the ABC Test. The question here is, what does the new labor bill mean? Or is it the case that the new labor bill is "just" an embodiment of the ABC Test. If so, please state that clearly. I don't get that right now from your comment.
- dragonwriter 7y ago
  The new labor bill puts the ABC test, which is currently in case law, into statute.

rem7 7y ago

From your second example... that sounds like it’s going to affect construction workers too... a lot of contractors just hire construction workers day to day to expand their workforce. Would that become illegal or is it different in construction?

nradov 7y ago
A lot of what contractors do in hiring day labor and paying them cash under the table is already illegal. I don't think this bill would change that.
bryanlarsen 7y ago
If yes, is this not a good a thing? Part-time employees are not significantly different than contractors in terms of benefits owed so it's not a major cost for that use case. And if you're working full-time for somebody, don't you deserve the benefits everybody else gets?
- breerly 7y ago
  Yes and no. This will force companies to hire more employees, true, but at the cost of a much smaller overall workforce. Remember that cost is a constraint for businesses. Depends what is more valuable from a human + capitalism perspective, fewer work opportunities that pay better or more competition and “starter/flexible” work overall.
  - bryanlarsen 7y ago
    > but at the cost of a much smaller overall workforce. That's what people predict about minimum wage increases too. Yet the effect has always been smaller than predicted, sometimes even non-existent.
- ansible 7y ago
  > And if you're working full-time for somebody, don't you deserve the benefits everybody else gets? I'd argue that if you deserve benefits like everyone else. Especially ridiculous is the situation some people I know of are in. They are working two or three part-time jobs because they can't find a full-time position. The places that employ them have many part-time positions, and fewer full-time positions. And these people don't get benefits. So you've got people who are working 40+ hours a week, for employers who have enough hours to work to have full-time employees, but instead have part-time job openings instead. All so that the employers don't have to pay for benefits.
  - JeffL 7y ago
    I would guess it's because their labor is not worth minimum wage plus all the extra overhead costs of a full time employee. It's people trying to get by despite stupid price controls that don't reflect reality.
ThrustVectoring 7y ago
A general contractor's area of business isn't exactly doing construction, it's the project management aspects. Talking to vendors, organizing work crews, acquiring specialized labor from various trades, communicating project information to various stakeholders, etc. It's a subtle distinction, but one that I suspect would survive legal scrutiny.

bko 7y ago

If that's true, then I would argue that Uber and Lyft are contractors not workers: > First do you know how to do the work and use your own expertise to adapt to circumstances or do you follow specific direction, training, and escalation procedures as dictated by management? ... If you know what to do and get only summary instructions then you are likely a contractor Surely Uber drivers already know how to drive. I'm not sure whether they're under obligation to follow GPS instructions. > Second, if you are hired by a cleaning company to extend their cleaning capacity using their methods and equipment then you are likely an employee, but if you are hired by a software company to sweep their floors whenever they get really dirty then you are probably a contractor. The Uber driver uses her own equipment although you could argue that they use Uber's methods. > if you do cleaning on your own for various clients and are hired to do cleaning then you are likely a contractor, but if you clean for one client by their instruction and with their oversight and support then you are probably an employee In my experience, almost every single Uber I've been in drives for Lyft as well.

rtpg 7y ago
I think the sticking point for Uber is > the person performs work that is outside the usual course of the hiring entity’s business It’s hard to say that offering rides is not Uber’s core business. There might be an argument that Uber is just a matching service, but that’s an argument to make, not self-evident. This sort of stuff is happening a lot in construction and cleaning services as well. If you run a business, the people that do the core part of your business should be considered employees, or else all of labor law becomes pointless.
yardie 7y ago
> I'm not sure whether they're under obligation to follow GPS instructions. UberX, no, the GPS is a suggested route. UberPool, yes, you have to follow the GPS as instructed. > The Uber driver uses her own equipment although you could argue that they use Uber's methods. This is where I tend to agree, with caveats. A rideshare driver is a contractor. But when it comes to compensation Uber and Lyft want to act as an employer. Currently, compensation has been trending down to the point it's becoming a unprofitable for the driver. A contractor would be able to negotiate a rate saying, "I'll drive for $0.55/mile." What we currently have is an email to all "contractors" stating the rate starting today is X/mile. That sounds more like an employer notice than a contract negotiation.

graeme 7y ago

So you can't subcontract? That's often within the same industry

i_am_proteus 7y ago

This seems like it will affect government and corporate "on-site" contractors more than software-routred cabs. Unintended Consequences, arriving.

dragonwriter 7y ago
Individual government on-site “contractors” are almost entirely W-2 employees of firms that are contracted by government. That's often, though perhaps not as consistently true, of BigCorp onsite contractors, as well. There will be no impact to those at all.
- i_am_proteus 7y ago
  So if one wanted to drive flexibly for a software-routed cab company under the proposed California regume, could one set up an LLC and then contract through the LLC?
  - gamblor956 7y ago
    Yes, probably. That is actually how most (sub)contractors in the construction world currently have things set up for legal reasons.
  - malandrew 7y ago
    If anyone is looking for a startup idea, there's probably some merit in setting up an LLC-as-a-service business so those individuals impacted by AB5 that do want the flexible work can continue to do so without much headache.

jiveturkey 7y ago

> To attempt to summarize Correct me if I'm wrong, but you're summarizing the ABC Test. The question here is, what does the new labor bill mean? Or is it the case that the new labor bill is "just" an embodiment of the ABC Test. If so, please state that clearly. I don't get that right now from your comment.

dragonwriter 7y ago
The new labor bill puts the ABC test, which is currently in case law, into statute.